The turnover in Fixed Income and Currency (FIC) markets for the month ended June 30, 2019 was N19.12trillion representing 6.70percent (N1.37trillion) month-on-month (MoM) decrease against the turnover recorded in May 2019 (N20.49trillion).
Though, year-on-year (yoy) the record FIC market turnover represents 10.93percent or N1.88trillion increase from N17.23trillion recorded in June 2018.
FMDQ OTC Securities Exchange monthly report shows Treasury Bills (TBills) and FX product segments remained the major contributor to turnover in the OTC market, jointly accounting for 70.72percent of the total OTC market turnover in June 2019 and representing a 1.75percent increase on their joint contribution in May 2019 (68.97percent).
On the FX Market, the total FX market turnover in June 2019 was $16.78billion (N6.05trillion at $/N360.74), representing a 10.16percent ($1.90billion) MoM decrease. The analysis of FX turnover by trade type indicated MoM decrease across all categories, with Member-Clients trades recording the highest MoM decrease at 14.35percent ($1.75billion). Also, the analysis by product type indicated that the MoM decrease in FX turnover was driven by the 23.15percent ($2.47billion) MoM decrease in FX Spot, despite the 7.13percent ($0.57billion) MoM increase in FX Derivatives turnover.
In June 2019, the 36th Naira-settled OTC FX Futures Contract (NGUS JUN 26 2019) with total open contracts size of $529.10million matured and was settled, bringing the total value of OTC FX Futures Contracts offered and settled on the Exchange since the introduction of the product to circa $16.74billion, with a total of $25.86billion in open contracts. Further, in addition to the new 12-month contract (NGUS JUN 24 2020) introduced in June at a price of $/N362.38, a newly introduced contract, the 13-month contract (NGUS JUL 29 2020) with futures price of $/N362.53 was also listed in June 2019 to enable market participants obtain a full 365-day hedge on their FX exposures, which was not possible under the previous existing market structure.
In June 2019, the CBN Official Spot rates and the average exchange rate of the Naira against the US Dollar at the I&E FX Window appreciated from the rates recorded in May 2019 by $/N0.05 and $/N0.09 close at $/N306.90 and $/N360.64 respectively, while the average parallel market rate remained constant at $/N361.
Fixed Income Market (T.bills and FGN bonds): In June 2019, average OMO bills outstanding was N14.96trillion, representing a MoM increase of 2.86percent (N420billion) from N14.54trillion recorded in May 2019. Conversely, average T.bills outstanding recorded a MoM decrease of 0.89percent (N20billion) from N2.58trillion in May 2019 to N2.56trillion in June 2019. On the other hand, average FGN bonds outstanding recorded a MoM increase of 1.12percent (N100trillion) to close at N8.84trillion in June 2019 from N8.74trillion in May 2019.
Trading intensity, representing the ratio of turnover to outstanding amount for FGN bonds increased from 0.17 in May 2019 to 0.18 in June 2019 while it remained unchanged for T.bills. Trading intensity in the T.bills and FGN bonds markets YtD stood at
2.74 and 0.82 respectively compared to 2.67 and 0.71 for the same period in 2018. T.bills within the 6-12 months maturity bracket remained the most actively traded in June 2019, accounting for 49.52percent of the total FI market turnover. In June 2019, weighted average yields on the medium-term and long-term maturities decreased by 0.47percent and 0.13percent respectively, whilst weighted average yields on short-term maturities increased by 0.15percent due to the increase in yield on 1M securities. This may be attributable to sustained demand for securities with longer term maturities as market participants are focused on booking profits in anticipation of a further decrease in OMO stop rates by the CBN. Furthermore, inflation-adjusted yield in the period under review remained positive for the 1month tenor.
Money Market (Repurchase Agreements/Buy-Backs and Unsecured Placements/Takings):
Turnover in the Repurchase Agreements/Buy-Backs segment of the Money Market has declined consistently from March 2019 where turnover stood at N5.38trillion. In June 2019, turnover was recorded at N3.64trillion, representing a 21.40percent (N1trillion) MoM decrease from N4.63trillion recorded in May 2019, whilst recording a 56.95percent (N1.32trillion) YoY increase from the turnover recorded in June 2018 (N2.32trillion). However, turnover in Unsecured Placements/Takings in June 2019 was N300billion, representing a 39.75percent (N90billion) MoM increase from the N220billion recorded in May 2019, and a YoY increase of 612.84percent (N260billion) from the turnover recorded in June 2018 (N40billion). The MoM decrease in total turnover in the Money Market was attributable to the 0.93percent and 0.71percent decrease in average Money Market Over-Night (O/N) and Open Buy Back (OBB) rates respectively, which closed at 8.08percent and 7.50percent in June 2019 from 9.01percent and 8.21percent in May 2019; indicating an increase in liquidity in the inter-bank market.
Market Surveillance:
Total number of executed trades reported on the E-Bond Trading System in June 2019 was 11,478 representing a 23.20percent (3,467) MoM decrease from the number of trades executed in May 2019 (14,945), driven by a MoM decrease in T.bills and FGN bonds trades by 3,150 (23.83percent) and 317 (18.37percent) respectively.
